Compliance and Anti-Corruption

On August 17, the Official Gazette published Decree No. 27 of the Ministry General Secretariat of the Presidency, which establishes technical standards for information security and cybersecurity in accordance with Law No. 21,180 on Digital Transformation of the State. The norm seeks to define standards and technical guidelines that must be complied with by the bodies of the State Administration to guarantee the confidentiality, integrity and availability of the information, as well as the security of the IT infrastructure that supports the administrative procedures in electronic platforms.

Among the key aspects of this standard are:

Initial diagnosis: Each organ of the State Administration must perform an initial diagnosis of the cybersecurity status of its electronic platforms, following the technical guidelines mentioned in the standard.

Information security and cybersecurity policy: Each agency is required to develop a policy approved by the Senior Service Chief. This policy must establish general guidelines on information security and cybersecurity, ensuring the protection of software, hardware, systems and data components.

Technical guide: To facilitate the implementation of the standard, the Digital Government Division of the Ministry General Secretariat of the Presidency will issue one or more technical guides that will establish the detailed operational aspects and processes.

These technical guides will focus on the following points:

– Identification function: activities and processes to properly identify and manage information security and cybersecurity risks will be described. This will include the context of the State Administration body, governance, information asset management, risk management and relationship with cloud service providers.
– Protection function: This will detail the processes and activities to ensure security measures in the provision of services, including management of servers, networks, authentication, access control and data security.
– Detection function: The processes and actions to detect security incidents, including event analysis to identify anomalies, continuous security monitoring and the establishment of detection processes will be described.
– Response function: The processes and activities required to take technical and organizational measures in the event of detecting a security incident shall be detailed. This will include planning, communication, analysis, mitigation and response improvements.
– Recovery function: Processes and actions to maintain recovery plans and restore capabilities affected by security incidents shall be described.

The implementation of the standard will follow the gradual plan established in Decree with Force of Law No. 1 of 2020, which contemplates a preparation phase for state agencies from 2022 to 2023, and extends towards full implementation during the years 2026 and 2027.

The standard must be reviewed and updated at least every two years, incorporating lessons learned and good practices.

The importance of a constant review of internal cybersecurity systems, practices and data protection policies lies not only in the prevention of possible cyber-attacks, but also in safeguarding against criminal liability established in Law No. 20,393 on Criminal Liability of Legal Entities for computer and related crimes.

Should you require additional information on this matter, please contact Macarena Naranjo (mnaranjo@jdf.cl) and María Gracia Oyarce (mgoyarce@jdf.cl).

Law No. 21.595, known as the Economic Crimes Law, has been enacted and published, officially entering into force as of August 17, 2023. This new legislation, designed as a solid response in the fight against corruption and illicit practices in the economic sphere, marks an important milestone in the regulation of these issues.

Highlighting its main modifications

1. Expansion of the catalog of economic crimes: The new law introduces an innovative classification into four categories, ranging from financial crimes to tax, labor and environmental offenses.

2. A renewed sanctions regime: The regulation establishes a system of differentiated sanctions and specific criteria for economic crimes. This involves measures such as the confiscation of profits derived from illicit activities, accessory sanctions that impact on public offices and executive functions, as well as a unique method for calculating fines based on the previous income of the offender.

3. Innovation in types of crimes: The law introduces new criminal offenses such as misappropriation of professional secrets, violation of commercial secrecy, environmental crimes, computer fraud and wage fraud. These additions reflect the evolution of criminal practices in the economic sphere.

4. Expansion of criminal liability of legal persons: The scope of liable legal persons is expanded to include corporations, state universities, companies created by law, political parties and religious legal persons under public law. In addition, the range of crimes attributable to these entities is expanded to cover all economic crimes systematized in the law.

5. Modifications to the criminal liability of legal persons

The concept of responsible legal persons is broadened to include State corporations and universities, companies created by law, political parties and religious legal persons under public law. In addition, the range of crimes attributable to the criminal liability of legal persons is increased, as all economic crimes systematized in the law will be included.

The supervision of the legal person is incorporated as a new penalty and precautionary measure, if necessary for the purpose of preventing the perpetration of new crimes, and it is established that the liability of the legal person is autonomous and independent from the criminal liability of the natural person.

Crime prevention model as an exemption from criminal liability. The crime prevention model becomes more important, since an effectively implemented model would allow exempting the legal person from criminal liability.

The law states that a crime prevention model effectively implemented by the legal person will be understood as adequate for the purposes of exempting it from criminal liability when, to the extent required by its corporate purpose, line of business, size, complexity, resources and the activities it carries out, it takes serious and reasonable consideration of the following aspects:

• Identification of the activities or processes of the legal entity that imply risk of criminal conduct.
• Establishment of protocols and procedures to prevent and detect criminal conduct, which must necessarily consider secure channels for reporting.
• Assignment of one or more persons responsible for the application of such protocols.
• Periodic evaluations by independent third parties and mechanisms for improvement or updating based on such evaluations.

Consequently, it will not only be necessary to make formal changes in the existing documents of each company, but also an exhaustive examination of the activities carried out that could lead to the commission of any of the economic crimes contemplated in the law.

Importance of the entry into force.

It is important to consider that the provisions enter into force as of August 17th,2023 with the exception of the provisions of article 60 of the same law, which states:

Antitrust and Competition Rules

Legal persons will not be criminally liable for the crime of collusion, as long as the legislator does not coordinate the concurrence of the different penalties, sanctions and measures that may be applicable to a legal person for the commission of this crime, regulated in Decree Law 211, which establishes Rules for the Defense of Free Competition.

Amendments to Law No. 20.393

With respect to the amendments to Law No. 20.393 on Criminal Liability of Legal Entities, they shall only be understood to be in force as of the first day of the thirteenth month following their publication.

Supervisor of the legal person

Finally, with respect to the incorporation of the subjection to a supervisor applicable to legal persons, either as a precautionary measure or as a penalty, due to the inexistence or serious insufficiency of an effective crime prevention system, although it is subject to the deferred validity indicated above, its application will also be subject to the issuance of a regulation. Such regulation must be issued within one year from the date of publication of the Law in the Official Gazette.

Should you require additional information on this matter, please contact Macarena Naranjo (mnaranjo@jdf.cl) and María Gracia Oyarce (mgoyarce@jdf.cl).

On July 19, the Constitutional Court (TC) concluded the review of the Economic and Environmental Crimes Bill (“Draft Law”) and determined that it does not contain norms contrary to the Constitution. Following this decision, the bill was ready for its official enactment into law, maintaining the same terms in which it was dispatched by Congress after the Government’s veto.

On August 1, 2023, the TC issued its ruling, Rol 14.455-23 CPR, which includes the following relevant aspects:

I. ARTICLES REFERRED BY THE CHAMBER OF REPRESENTATIVES

The Chamber of Deputies referred the bill to the Constitutional Court for the purpose of submitting it to the control of constitutionality. In this case, it corresponded to the Constitutional Court to pronounce on the norms of the Bill that were included within the matters reserved by the Constituent to a constitutional organic law. The legislator requested the Constitutional Court to rule on articles 42; 47, fifth paragraph; 49, number 1; 50, numbers 22 and 29; 59, number 2, letter a), and 64, third paragraph.

II. PROVISIONS OF THE DRAFT LAW SUBJECT TO REVIEW BY THE CC

Notwithstanding the aforementioned articles, the court only ruled on article 47, fifth paragraph, and article 64, third paragraph. Additionally, it ruled on article 50, paragraphs 2 and 9, stating the following in the sentence:

a. Items not considered for review.

• Article 42 of the Draft Law

The normative provision under analysis regulates the power of the Public Prosecutor’s Office to request precautionary measures necessary to secure the assets of the accused. This, in order to allow the execution of the confiscation of profits regulated in the law.

Observation TC: the analyzed provision does not innovate competitively in the matter, nor can it be understood as creating a new attribution called to be exercised by the competent criminal judiciary, therefore, the analyzed precept constitutes a specification of duties of the Public Prosecutor’s Office. Therefore, it does not establish new attributions related to the constitutional organic law.

• Article 49, numeral one of the Draft Law

The rule under review replaces article 468 bis of the Code of Criminal Procedure, regulating the execution of the confiscation of profits and including the cases of confiscation imposed without prior conviction.

Observation TC: the analyzed provision does not innovate competently in the attributions of the courts of justice. The attribution to execute what has been ruled by a court with competence in criminal matters is already contained in the Code of Criminal Procedure, not having been considered, either, as proper of the constitutional organic law.

• Article 50, numeral 22 and numeral 29 of the Draft Law

The norm under analysis introduces amendments to Law No. 20.393, which establishes the criminal liability of legal persons.

As consulted, N°22 introduces a new article 17 quater, related to the execution of the supervision of the legal person and the designation of a supervisor of the offending legal person, while its N°29 replaces article 20 of the aforementioned law, regulating the ways of initiating an investigation of the criminal liability of the legal person, which incorporates as a way of initiating the complaint, and the accusation in those crimes that may cause serious social and economic effects.

Observation TC: No. 22 of the article does not constitute an innovation in the competence of the courts of justice, since the competence for the execution of criminal sentences is already established in Article 113 of the Organic Code of Courts. In turn, N°29 of the article in question cannot be considered as a regulation of organic constitutional rank in accordance with Article 84 of the Constitution, since it only regulates a modality of exercise of investigative powers currently in existence.

• Article 59, second paragraph, of the Draft Law

The rule under review introduces amendments to Decree Law No. 211, which sets the rules for the defense of free competition. As consulted, the provision under analysis replaces the fourth paragraph of article 63 of said normative body, regulating the mitigation of penalty for cases of cooperation with additional antecedents contained in article 39 bis.

TC Observation: The rule does not innovate competentially in the attributions of the courts of justice and is only a specification of the power to determine penalties according to circumstances modifying criminal liability. Moreover, the powers established in paragraph 4 of Article 63 of the law that is replaced by the rule under review had already been qualified as matters of common law by the TC previously (STC Rol N°3130. c. 40°).

b. Articles considered for review of constitutionality by the TC

• Article 47, fifth paragraph, of the Draft Law

The norm under review contemplates exceptions to the exercise of the civil action, establishing, as consulted, the attribution of the Public Prosecutor’s Office to request information on assets of the criminally liable party in relation to the commission of possible economic crimes. The article states that the Public Prosecutor’s Office, at the request of the State Defense Council, shall be empowered to request the relevant information from the SII and the CMF, as well as banks, financial institutions, insurance companies and legal entities subject to control.

Observation TC: the referred provision affects the attributions of the Public Ministry in accordance with article 84 of the Constitution, regarding the creation of a new prerogative within the framework of the exercise of its functions of criminal prosecution, a matter not previously regulated, and that, in such merit, affects the indicated constitutional organic law.

• Article 64, third paragraph, of the Draft Law

The provision under analysis regulates the recognition of the modifying circumstance of responsibility of effective cooperation, regulating, as consulted, the hypothesis in which it must be recognized by the substantiating court, as well as the possibility for the Public Prosecutor’s Office to reach binding agreements with whoever is recognized as a cooperator within the framework of the criminal proceeding.

TC Observation: this rule falls within the scope that the Constitution has reserved to the constitutional organic law, by regulating the powers of the criminal court in accordance with Articles 77, first paragraph, and 84 of the Constitution and affects the powers of the Public Prosecutor’s Office.

In the twenty-second recital of the sentence, the Constitutional Court points out that, without prejudice to its obligation to rule on the articles requested by the legislator, it cannot fail to rule on other provisions contained in the same bill that are in the nature of constitutional organic laws. In this sense, ex officio, it pronounces itself on the following article.

• Article 50, second and ninth paragraphs, of the Draft Law

Article 50 N°9 of the bill establishes a new cause for dissolution of political parties if their legal personality is extinguished as a result of a sanctioning sentence. The Constitutional Court determined that this provision is framed within the competencies granted by Article 19 N°15 of the Constitution, which establishes that a constitutional organic law shall regulate the aspects related to political parties, including the sanctions for non-compliance with its precepts and the possibility of dissolution.

On the other hand, Article 50 N° 2 of the bill broadens the scope of application of Law N° 20.393, which deals with the criminal liability of legal persons. This article makes the provisions of the law applicable to companies, corporations, state universities, political parties and religious persons of public law. The Constitutional Court held that this extension also falls within the scope of a constitutional organic law according to Article 19 N°15 of the Constitution.

TC Observation: In relation to political parties, Article 19 N°15 of the Constitution establishes that a constitutional organic law shall regulate the matters that concern them, including sanctions for non-compliance and the possibility of dissolution. The Court emphasized that the dissolution of parties, even by sentence of a criminal judge, has no impediments according to the Constitution.

On the other hand, Article 50 N°9 of the bill creates a new general cause for the suppression of public services created by law, such as State universities. These entities act with legal personality under public law, which is fundamental for their existence and operation. The Court pointed out that the regulation of the extinction of their legal personality constitutes part of their basic organization, which is a matter of constitutional organic law according to Article 38 of the Constitution.

Article 65 of the Constitution establishes that the creation and suppression of public services is the exclusive competence of the President of the Republic and the legislator, and does not correspond to the judiciary. Although Article 50 N°9 of the bill empowers the judge not to apply the sanction of dissolution in certain cases, the Court considered that this competence exceeds its mandate and corresponds to the legislator and the President.

Consequently, the Constitutional Court declared that Article 50 N°9 is constitutional, but emphasized that it should not be applied to state universities because its suppression is a matter of constitutional organic law and the exclusive competence of the legislator and the President of the Republic.

I. SENTENCE

In its sentence, the Constitutional Court declared:

1. Articles 50, No. 2 and 64, third paragraph, of the Bill, are in conformity with the Political Constitution of the Republic.

2. Article 47, fifth paragraph, of the Bill is constitutional in the understanding that the attribution of the Public Ministry contemplated in such provision does not exempt the prosecutor from the obligation of requesting judicial authorization in the event that the information requested may eventually violate fundamental guarantees.

3. Article 50 Nº9 of the Bill is constitutional only insofar as it is not applicable to the State universities, in accordance with what has been expressed.

4. No pronouncement is issued, in a preventive review of constitutionality, of the remaining provisions of the Bill, since they do not deal with matters that affect constitutional organic law..

II. NOW, THE NEXT STEPS?

Pursuant to the provisions of Articles 36 and 37 of the Organic Law of the Constitutional Court, once the process of constitutionality control by the Constitutional Court is concluded, the Chamber of origin must proceed to send the bill to the President of the Republic for its promulgation. It is important to remember that now that the Constitutional Court has ruled on the constitutionality of the bill, no request to resolve questions on the constitutionality of the bill or of one or more of its provisions will be admitted for processing by the Court. Now, it only remains to wait for the executive to issue the promulgating decree, which will declare the existence of the law, ceasing to be a mere bill and ordering it to be enforced and published in the Official Gazette.

It should be recalled that the general provisions of the bill will enter into force on the day of its publication in the Official Gazette, without prejudice to the exceptions contemplated in Article 60 of said law. One of those exceptions contemplates the modifications and new requirements that will be included in Law No. 20.393, which establishes the criminal liability of the legal entity, which will enter into force thirteen months after its publication date. During this period, companies will have to review and strengthen their crime prevention models, as the penalties and fines established in the new regulations are very strict. This situation represents a valuable opportunity to improve comprehensive crime prevention systems and, in this way, promote adequate regulatory compliance that contributes to the safeguarding of legality and ethics in the economic and environmental sphere.

Should you require additional information on this matter, please contact Macarena Naranjo (mnaranjo@jdf.cl) and María Gracia Oyarce (mgoyarce@jdf.cl)

The Internal Revenue Service (SII) and the Public Prosecutor’s Office have signed a collaboration agreement to strengthen the fight against economic, tax, corruption and money laundering crimes in Chile.

The Exempt Resolution N°81, issued by the SII on July 20, 2023, formally approves this agreement that was signed on June 13, 2023. The initiative seeks to promote collaboration and reciprocal coordination between both institutions, in order to develop strategies and projects in the medium and long term, data analysis, statistics, training and other activities that contribute to strengthen the investigation and prosecution of highly complex crimes.

Among the fundamental pillars for the fulfillment of the objectives are:

1. Strategic planning: Both institutions are committed to establishing clear and achievable objectives, defining concrete commitments and evaluating the quality and impact of the proposed measures.
2.Efficiency: The aim is to create procedures and collaborations that generate value and better results with an efficient use of resources and personnel.
3. Digital transformation: The agreement will promote the adoption of available technologies and tools to effectively achieve the proposed objectives.

Among them, the following are highlighted:

Coordination for the criminal prosecution of tax crimes: Collaboration will be optimized in cases involving both institutions, designating “tax criminal coordinators” at the national and regional levels for greater efficiency.

Support in corruption and money laundering cases: Permanent cooperation will be maintained to improve efforts in the detection and investigation of these crimes, including the communication of conditional suspensions of proceedings and reparation agreements. The above, under national and international guidelines, such as, for example, the recommendations of the OECD.

Data analysis and statistics: A coordination body will be established to share information and data related to tax crimes in order to improve the effectiveness of criminal prosecution.

Technological integration: Collaboration and communication mechanisms will be implemented, as well as integration software solutions, to simplify access to and use of information. For example, through the implementation of a web service or API.

Reciprocal training: Both institutions will develop training activities aimed at officials to improve performance in their respective areas of work.

It will be the task of the SII and the Public Prosecutor’s Office to establish the procedures and formalities of linkage and cooperation to materialize the proposed objectives.

With this strategic alliance, these institutions hope to make significant progress in the fight against crime in the economic and financial sphere, promoting a culture of integrity and responsibility in the country’s business and financial environment.

Additionally, this collaboration demonstrates how public institutions are preparing for the entry into force of the controversial economic crime bill, which has already completed its passage through Congress and whose constitutionality was confirmed by the Constitutional Court on July 18, despite the efforts made by the Confederation of Production and Commerce before this body.

If you require additional information on this matter, please contact Macarena Naranjo (mnaranjo@jdf.cl) and María Gracia Oyarce (mgoyarce@jdf.cl)

The public consultation for the co-creation of the National Public Integrity Strategy (hereinafter the “Strategy”), convened by the Ministry General Secretariat of the Presidency, is open until November 10, 2022 at 12:00 AM.

This Strategy aims to guide the anti-corruption policies that will guide Chile in the next ten years, focusing on different thematic areas such as transparency, public resources, civil service, politics and private sector.

As stated in its objectives, it seeks to generate an effective and coordinated ecosystem, with capacities for innovation, prevention, detection, investigation and sanctioning of breaches of integrity and acts of corruption, in the same sense as the guidelines that the OECD has outlined.

The consultation is open, and both members of the public and private sector, as well as citizens, may participate in the following link https://consultaintegridad.gob.cl/

If you require additional information on this matter, please contact Andrea Abascal (aabascal@jdf.cl), and/or Rocío Vergara (rvergara@jdf.cl).

On June 20, 2022, Law No. 21.459 on computer crimes was published, which incorporates new crimes to Law No. 20.393, which establishes the criminal liability of legal entities.

In effect, criminal liability is extended by incorporating in the catalog of base crimes the crimes of i) attack to the integrity of a computer system, ii) illicit access, iii) illicit interception, iv) attack to the integrity of computer data, v) computer forgery, vi) reception of computer data, vii) computer fraud, and viii) abuse of devices.

Likewise, Law No. 21.459 amended Law No. 19.913, which created the Financial Analysis Unit, by incorporating the above mentioned computer crimes to the criminal offenses that must precede the crime of money laundering.

Should you require additional information on this matter, please contact Andrea Abascal (aabascal@jdf.cl) and/or Rocío Vergara (rvergara@jdf.cl).

On November 2, 2021, the Financial Analysis Unit (“UAF”) issued Official Communication No. 663, by means of which it makes recommendations on the use of electronic media in the preventive systems against money laundering and financing of terrorism of regulated entities, since it has detected a low use of such media, especially in relation to the background request form, referring to the identification of Politically Exposed Persons (“PEPs”), and the form for the identification of beneficial owners.

In this regard, it is recommended that all obligations imposed by law and by UAF circulars may be fulfilled by electronic means, which will be fully valid for the purposes of the corresponding audits.

It is also noted that regulated entities may collect and store information electronically, for which purpose they must take special care to have mechanisms in place to ensure the identity of the clients who provide the information.

Should you require additional information on this matter, please contact Andrea Abascal (aabascal@jdf.cl) and/or Rocío Vergara (rvergara@jdf.cl).